Railway Ministry to scrap bids for 9,500 Wagons, Water Plants

According to a report in The Economic Times, the railway ministry will cancel bids called for procuring 9,500 wagons and for setting up eight Rail Neer plants as it has found a lack of transparency in the tendering process. The bids for these contracts have been submitted but not opened yet. A senior official said the ministry is also ordering a review of its entire tendering process and that it may scrap an invited tender if it finds an anomaly. “There was a lack of transparency in tendering process of IRCTC’s Rail Neer factories, which would have led to setting up of sub-standard plants,” the official told. “All the ongoing tendering processes would be scrapped and new projects would be awarded only after we come up with a robust 100% transparent process.”

Rail Neer is the packaged drinking water produced and supplied in trains by the railways catering arm, the Indian Railway Catering and Tourism Corporation (IRCTC). The official said the ministry is reviewing all on-going tenders for capacity expansion works that were called by railway zones and public sector units under the ministry. The railways has been following a 'two packets system of tendering’ for procurement, a system considered less transparent by experts. Under this system, tender quotation are submitted in two sealed envelopes, one containing the technical and commercial offers and the other containing the financial bids. Such a physical system of bidding has loopholes and the potential for rigging. The Rail Board has now decided that starting with the upcoming electrification projects, all railway procurement and contracts will be done under the reverse auction route through the electronic mode, as it was done for the auction of coal blocks.

The Rail Neer plants for which bids were called were to come up in the public-private partnership mode in Bhopal, Sanand, Bhusawal, Jagi road near Guwahati, Mallavalli near Vijayawada, Ranchi and Mandla near Jabalpur. The railways is also reviewing all upcoming catering and hospitality contracts of IRCTC. The railways awards contracts worth more than INR 50,000 crore for operations and capacity expansion- related works every year. The official said there were major transparency issues in the tendering process for procurement of wagons that would have led to cost escalation and hence all wagon procurement tenders have been scrapped. The railways procures 10,000 to 12,000 goods wagons a year from private companies.

The funds for these are provided by the Indian Railway Finance Corporation. The cancellation of contracts will cause some delay in procuring new wagons, impacting plans of companies such as Texmaco Rail and Engineering, Titagarh Wagons, Jindal Rail and Jupiter Wagons, which get most of their business from the railways. The railways hopes to sort the process and call for fresh bids soon.